This website is a collection of my writings which primarily deals with issues of political and socio-economic issues in the Caribbean.
It also contains links to important resources on the region and it's people.

Friday, May 3, 2013

The Looming Canada-CARICOM Free Trade Agreement

On April 23, Kamla Persad-Bissessar, the Prime Minister of Trinidad and Tobago visited Canada
to deliver her pitch to make the Canada-CARICOM free trade agreement a
reality. The current Canada-CARICOM trade deal, known as CARIBCAN, is
set to expire this year because the World Trade Organization stands in
firm opposition to its renewal. Persad-Bissessar—who is set to become
the head of CARICOM in July—remarked that
“Trinidad and Tobago is very open, and we would welcome a free trade
agreement, but because of the structure of CARICOM, it isn’t a decision
we can take,” she said. “It has to be done in collaboration with
CARICOM.”

Given Canada’s role as the global leader in mining—home to 75% of the world’s mining companies—and
the leading producer of tar sands oil, it should come as no surprise
that Canada is seeking to make deeper inroads into the resource rich
countries of the Caribbean. However, in contrast to the CARICOM-EU
Economic Partnership Agreement, so far there has been little analysis of
the potential impact this trade deal will have on the economically
vulnerable Caribbean.

The primary focus of this lopsided free trade deal is to make it
easier for Canadian investment to go into resource-rich countries such
as Trinidad, Guyana, Jamaica, Suriname and Haiti—and to protect the
rights of Canadian investors. Secondly, the liberalization of trade and
investment between Canada and the Caribbean will make it much easier for
Canadian firms to takeover the already fragile Caribbean manufacturing
and service industries. Currently CARICOM accounts for less than 1% of
Canada’s foreign trade, yet Canada is the third most important market
for CARICOM-based goods, after the United States and the European Union
(primarily the United Kingdom).

According to
Canada’s Ministry of Foreign Affairs and International Trade “A
bilateral trade agreement with CARICOM could deliver commercial benefits
across many sectors of the Canadian economy, including industrial goods
(e.g. pharmaceuticals, products of base metals such as iron, steel, and
copper, electrical equipment), agriculture (e.g. french fries, pork
cuts, pulses), and fish and seafood. In some of these sectors, CARICOM
tariffs range from 5%-60%. A trade agreement with CARICOM would also
provide a more secure and predictable business environment for Canadian
investment and enhance market access for Canadian service providers.”

In 2010, Canada’s largest imports
from CARICOM included gold from Guyana, oil and petroleum products from
Trinidad, and aluminum oxides from Jamaica and Suriname. With the
recent discovery of rare earth metals in Jamaica, the Jamaica Gleanerreported that
Canada will be seeking to join Japan in mining this resource which is
used for key components in smartphones and other high technology items.

The fact that Trinidad is pushing for the talks is due to the fact
that they hold a significant amount of tar sands—similar in composition
to that found in Alberta. Trinidad is hoping that Canadian investment
and technology would help to maintain the island’s oil revenues. In
2009, Trinidad and Tobago Newsdayreported that
“The extraction of oil from tar-sands involves a greater financial cost
and does more harm to the environment than pumping out traditional
crude oil, with some reports saying that separating the oil out of the
sand generates three times as much of the greenhouse gas,
carbon-dioxide, than pumping out conventional oil.” It is estimated that Trinidad holds between 900 million to 2 billion barrels of the tar sand crude oil.

Remaining on the issue of natural resources, investigative reports
have revealed that currently one-third of Haiti’s Northern Region
(approximately 2,500 square kilometers) has been granted as illegal
concessions to mining firms based in Canada and the United States. In
response to this, the Haitian Senate has called for a halt on all mining
activities in the Northern Region. It is important to note that if or
when a Canada-CARICOM free trade deal is signed into law, the ability of
the Haitian government to halt controversial, exploitative, and
destructive mining activities will be severely curtailed.

In regard to services, according to the Royal Bank of Canada,
Barbados was the third largest destination for Canadian direct
investment after the United States and United Kingdom. Over the past
decade, Canadians have invested a staggering $390 billion in Barbados.
However, this is not an investment in productive capital—but rather
Barbados is a leading offshore tax haven for Canada’s largest banks and
the extremely wealthy. In addition, Canadian banks (Royal Bank, Scotia
Bank, and the Canadian Imperial Bank of Commerce) already dominate the
Caribbean banking industry.

While the Canadian government has stated that
“Canada is committed to negotiating a modern trade agreement with
CARICOM that will take into account differing levels of development,
vulnerabilities associated with island states, and trade-related
capacity challenges”—given the very real power imbalances between the
Caribbean and Canada, CARICOM would be wise to look toward Mexico to see
how such free trade deals play out.

Mexico’s experience implementing free trade stands as a sharp
reminder that trade agreements are structured in such a way to benefit
the powerful, both between and within nations. Since the introduction of
NAFTA in 1994, Mexico has experienced a sharp increase in illegal
migration, food insecurity, and informal employment. While foreign
capital flooded Mexico, the majority of it did not lead to job creation—but rather to foreign acquisitions of existing Mexican firms.

It is telling that the primary service exports of the Caribbean—such
as tourism and financial services—do not need a free trade agreement. As
such, the CARICOM-Canada free trade deal must receive greater scrutiny
within the Caribbean in order to determine whether or not any real gains
for the region will emerge from the deal. Given that the majority of
Canadian investment is based in resource extraction and financial
services, it will predominately serve the interests of Canadian business
interests, doing little to alter the dependent nature of the region’s
economies. The signing of productive and mutually beneficial trade
agreements is one thing— but signing onto a lopsided agreement which
will only benefit the owners of resource enclaves is another thing
entirely and should be reconsidered.